Enbridge warns export capacity will be crimped until late 2019 at best
At this week's investor conference, Enbridge says its liquids pipelines are already at capacity, and that likely won't change until 2020.
The company warned that its $5.3 billion Line 3 Replacement project will likely not be operational until the second half of 2019 at best, possibly as late as November 2019. However, Enbridge says Canada's export capacity "remains unclear" post 2021, depending on how many new pipelines are built.
If pipeline capacity exceeds production, the company says it may have to offer "new incentive tolling" and "volume protection" to protect profitability on its Mainline network. Production from the oil sands is expected to grow by another 1 million bbl/day over the next decade.
Enbridge's Mainline is currently Canada's largest export pipeline, transporting about 2.5 million bbl/day of crude to markets in the Midwest. Once Line 3 is replaced, capacity will increase by another 375,000 bbl/day.
The company also noted its Mainline has room for 450,000 bbl/day of added capacity, through station upgrades, restoration of Line 4 and the reversal of Line 13. Those additional volumes can be funnelled to the Gulf Coast through a 250,000 bbl/day expansion of its Flanagan South/Seaway system.
Enbridge also says it is still evaluating the reversal of its jointly-owned Capline pipeline. Capline was designed to transport 1.2 million bbl/day of crude imports from the Gulf Coast into Patoka, IL. Lack of demand have prompted operator Marathon Petroleum to potentially reverse the line, bringing excess crude supplies from the Midwest into the Gulf Coast. The reversal would have an initial capacity of 300,000 bbl/day, and could be operational by the second half of 2020.
Gulf Coast refineries have a refining capacity of almost 10 million bbl/day and much bigger appetite for heavy crude than the Midwest, as the region struggles with declining imports from Mexico and Venezuela.
ENBRIDGE INVESTOR CONFERENCE: DECEMBER 2017 (LIQUIDS PIPELINES)